Key denies Chinese land advice

Prime Minster John Key denies telling Chinese investors that they should focus on long-term leases rather than land purchases, saying in many ways they amount to the same thing.

Key was overheard telling iwi leader Mark Solomon that the Government had told the Chinese they should invest further up the supply chain.

However, speaking in China on Tuesday, Key said the real point he made to the Ngai Tahu leader was that leases may cover more than 50 years and so were similar to ownership.

“I know a lot of people push for leasing because in this market we can only lease land, but my real point was the characteristics of long-term leases fundamentally look very much like freehold, over a period of time, so the bigger issue is to encourage them [the Chinese] to invest in areas that can create jobs for New Zealanders,” Key said.

The message the government had long made was that it actively encouraged investment that created additional jobs, he said.

“The general view of the government is that’s the primary place we’d like to see them investing, rather than just buying land [but] we’re not stopping them buying land.”

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Finance Minister Bill English said the Government had not had “formal” advice about changing the Overseas Investment Act, the framework in which foreigners must work to invest in certain assets in New Zealand. Key said the issue was often raised with him by those who had to work with it and while it was flawed, it was not likely to be something that could be changed easily, even if the government wanted to.

“It is an issue that gets raised by business groups and people that have to navigate the act,” Key said,

“The truth is that it’s a difficult act to build a consensus to change and it’s not something that’s on our horizon. It’s not perfect but it works probably as well as it can at the moment.”

Key's comment was made at a conference in Kaikoura at the weekend.

He spoke about the sensitivities of buying New Zealand land and suggested Chinese investors focus their investments instead on the supply chain.

That might include things like processing plants, which were less controversial than land sales which got people ''riled up'', he suggested.

Key also appeared to suggest that the Government had kicked around options including 50 to 100-year leases for foreign investors but saw too many fish-hooks.

The conversation took place on the eve of Key's trip to China where it is known that New Zealand's sensitivity to Chinese investment has been a concern.

Key's office later suggested he was not aware a journalist was present. The journalist believed she was known to Key as she had interviewed him and had previously been a press gallery reporter, worked in the Beehive and for a number of government departments and a State-owned enterprise.

Key's trip to China is aimed at reassuring Chinese mums and dads that New Zealand's milk products are safe following a botulism scare at New Zealand's biggest exporter Fonterra.

The botulism scare later turned out to be a false alarm but Key's trip underscores New Zealand's growing vulnerability to the economic powerhouse, which vies with Australia as our most important export market.

China's appetite to invest in New Zealand ventures including farms has been a source of controversy, however, and caused a domestic backlash.

NZ First leader Winston Peters has campaigned strongly against Chinese land purchases, while Labour has also promised to tighten up the foreign investment regime.